Sabre's internal studies indicate that capacity cuts alone are not likely to provide enough for airlines to break even, and the result is likely to be increased fares, which typically results in reduced volumes of bookings. We believe international routes will be largely unaffected due to their greater profitability. Capacity cuts will have significant impact on hotel bookings--and in fact, we are compiling updated info for July that shows that corporations are already starting significant cutbacks, even ahead of the capacity cuts becoming effective (i.e., July decrease in bookings would not be result of airline capacity cuts, since those will mostly become effective starting in September; therefore, decrease in hotel nights booked is the result of corporations scaling back).
Note that we are also seeing a similar decrease in car bookings, as well (as of July), in addition to significant shift to smaller, more fuel-efficient vehicles.
As you heard at a recent
NYU forum and are continuing to hear, however, hoteliers are looking to learn from the experience of the downturn in business in 2001. Rather than going the deep discount route, which ends up hurting the overall hospitality industry, most are advocating sticking to better channel optimization, increased emphasis on international, etc., to deal with decreased volumes.
